Today’s economic statistical releases:
The market was shocked into stupefaction at an Existing Home Sales release that was stronger than expected. Sales rose by 7.7% to an annual rate of 5.03 million. On a year-over-year basis, sales were up 18.6 %.
The Mortgage Bankers Association reports that purchase applications fell –4.7%, while re-fi apps rose by 2.2%, resulting in a composite index up by 0.6%.
The “Misery Index” was invented by economist Arthur Koon, an adviser to President Lyndon Johnson in the 1960’s. It’s a fairly simple formula really. Inflation plus the unemployment rate equals the misery index. Of course since it was first published, we’ve changed the way we compute unemployment so when you see that number today, you have to remember it is lower because of that change.
But still, relatively speaking, it is a good indicator of our economic condition. Today, the misery index stands at 12.87. For the past 4 presidents, the index has ranged from a low of 6.05 under Bill Clinton to the high you see today. Interestingly one term president George H.W. Bush had high index numbers during his presidency (low 10.9, high 11.10). And we know how that turned out.
Barack Obama’s numbers are the highest of the 4.
I noticed that some pundits are trying to compare Obama’s approval ratings at this point in his presidency to those of Ronald Reagan. The misery index gives you an idea of why that won’t fly.
Obama’s index numbers started at 8.92 in 2009. Reagan had an index of 17.97 his first year in office. But the second year numbers tell the tale. In his second year (1982) the index dropped by 2 plus points to 15.87. And the third year numbers are actually a tick lower than Obama’s at 12.82. But notice the trend. It’s down. Markedly down.
Obama’s is going the other way – from 8.92 to 12.87. So while you can certainly say they had similar numbers, what you can’t draw from those numbers is the probability of similar results when election time rolls around. One was trending markedly down and the other is doing the same on the up side. The only thing that has saved Obama from a much higher misery index is the fact that inflation has been successfully dampened by the Fed to this point. If that ever breaks loose, we may see an Carter era Misery Index.
Here’s another comparison that isn’t favorable for the incumbent. The new poverty index numbers are in and they’re not good. A sample:
Americans below the poverty line in 2010: 46.2 million
Official U.S. poverty rate in 2007, before the recession: 12.5 percent
Poverty rate in 2009: 14.3 percent
Poverty rate in 2010: 15.1 percent
Another index trending upward that isn’t good news for an incumbent.
So when you see the left trying to put a brave face on the numbers and making comparisons, all you need to remember to understand they’re simply whistling past the graveyard is that at the same point in each presidency, Reagan’s numbers were getting a lot better while Obama’s continue to get a lot worse. If you’re going to make a comparison to a recent President, Jimmy Carter or even George H.W. Bush are better comparisons – not Ronald Reagan.
And the key to remember about Bush and Carter is this salient description – “one term president”.
Today’s economic statistical releases:
ICSC-Goldman reports that retail sales fell by –1.2% for the latest week, though the year-on-year rate is on trend at 3.4%. Meanwhile Redbook’s same-store year-on-year sales came in at the low end of the trend at 4.1%.
Housing starts fell -5.0% in August to a lower-than-expected annualized pace of 0.571 million. But, building permits increased by 3.2%, signaling a bit more health in the future. Overall, housing still remains a drag on the larger economy.
Today’s economic statistical releases..well, "release", actually…is the Housing Market Index, which fell one point to 14. It’s been stuck around this level since the Home Buyer Tax Credit expired last June. Even the decline in mortgage rates over the last year hasn’t helped at all. This is also an index where the break-even point is 50, i.e, anything above that is an expansion, while below it is contraction. So, 14 is…bad.
Of course, part of the problem is that, not matter how low mortgage rates are, that doesn’t really help if the bank is demanding to see $200k in cash as security before they give you a $200k loan. Being unable to get a loan, unless you’re so credit-worthy that you don’t need a loan kind of defeats the purpose of mortgage lending. Foreclosures are still high, so banks are still scared to loan money.
Welcome to the world of bad debt overhang.
Note to progressives: Taxing The Rich™ won’t solve this problem. In case you were wondering.
One of the center pieces of the Obama administration’s recovery plan has been its green jobs program. It was touted by the President as an investment in the future. And he even managed to snooker Congress into including $38.6 of your dollars in a federal guaranteed loan program in the Stimulus bill – a version, in this case, of the government going into the venture capitalism business.
The results, as they say, are predictable:
A $38.6 billion loan guarantee program that the Obama administration promised would create or save 65,000 jobs has created just a few thousand jobs two years after it began, government records show.
The program — designed to jump-start the nation’s clean technology industry by giving energy companies access to low-cost, government-backed loans — has directly created 3,545 new, permanent jobs after giving out almost half the allocated amount, according to Energy Department tallies.
Half the money is gone and it has created 3,545 “new, permanent jobs”? You do the math – pretty high cost of job creating wouldn’t you say? Oh, and that number is actually down by 1,100 thanks to Solyndra.
So are green jobs, of the type to be found in alternative energy, the best way to approach easing unemployment? Not really, say some experts:
Obama’s efforts to create green jobs are lagging behind expectations at a time of persistently high unemployment. Many economists say that because alternative-energy projects are so expensive and slow to ramp up, they are not the most efficient way to stimulate the economy.
“There are good reasons to create green jobs, but they have more to do with green than with jobs,” Princeton University economics professor and former Federal Reserve vice chairman Alan Blinder has said.
Which is a nice way of saying this is more about political agendas than putting Americans to work, and unemployment is an excuse, not a reason, for pursuing this agenda. And the cost of that agenda has been pretty prohibitive with no real worthwhile results in the ostensible problem it was supposed help solve – unemployment.
Another example of government using your money to pick winners and losers and everyone coming out poorer in the bargain.
UPDATE: No, I didn’t see Dale’s post. My bad. I’ll leave mine, but now that Dale’s putting up a lot more stuff, I’m going to have to discipline myself to look first before I go popping something up (I use Live Writer, so unless I specifically look at the blog, I don’t see a list of what is up).
The president’s Green Jobs loan guarantee program, which we’re hearing a lot about, thanks to the Solyndra fiasco, does not appear to be a complete bust. In all fairness, it has to be said that this program has been instrumental in directly creating jobs. Indeed, the Washington Post reports that, after having spent $17.2 billion of the original $38.6 billion appropriated for the green jobs program, the Administration can now claim the creation of 3,545 permanent new jobs as a direct result. That’s 3,545 of our fellow Americans who now have gainful employment, thanks to the Obama Administration’s Green Jobs program. I’m sure they, and their families, are grateful.
Of course, if you do the math, that comes out to a cost of $4,851,904.09 per job. That seems…inefficient. I’m pretty sure that if the government gave me $4.8 million, I could at least double that rate of job creation.
At this rate, once the entire $36.8 billion is spent, we may employ 7,000 people via the Green Jobs program. Or to put it in other terms, 4,000 fewer people than the increase in those who claimed unemployment compensation for the first time this past week.
Today’s economic statistical releases—and there are a number of them, none of them particularly good:
Consumer inflation remains a bit heated with the headline CPI increase at 0.4% for the past month, while the core rate—less food and energy—rose by 0.2%. On a year-over-year basis, inflation rose to 3.8%. worries about Stagflation are not eased by this report.
Business conditions in the New York manufacturing region continue to contract. The Empire State Manufacturing Index fell to -8.82 from last month’s –7.72.
Jobless claims jumped 11,000 in the September 10 week to an unexpectedly high 428,000. The four-week average rose 1,000 to 3.741 million.
Manufacturing slowed significantly in August, as industrial production rose only 0.2%, compared to last month’s 0.9%. Capacity Utilization also fell slightly, to 77.4%.
The nation’s current account deficit narrowed slightly in the second quarter to $118.0 billion.
The Bloomberg Consumer Comfort Index in the September 11 period was -49.3, near this year’s low of -49.4.
The Philadelphia Fed Survey indicates that business conditions in the Mid-Atlantic region continue to contract, with the General Business Conditions Index at –17.5.
Today’s statistical releases:
Producer prices were restrained last month, with the overall PPI remaining unchanged, and the core rate rising only 0.1%.
Retail sales were weaker than expected, with the month-over-month sales rate increase in August unchanged from July. Less autos, the change was only a 0.1% increase.
Business inventories rose only 0.4% in July against a 0.7% rise for business sales.
MBA Purchase Applications for the September 9 week rose by 6.3%, the first overall increase in several weeks.
As it happens, there are no statistical releases for today, so we get a slight breather. But we are awaiting some important releases over the course of the week, with the most important of them hitting Wednesday and Thursday. The highlights of the coming week are as follows:
- Tomorrow’s Import/Export prices is of moderate importance, as is the afternoon’s release of the Treasury budget
- Wednesday brings us the PPI and Retail Sales
- Thursday is the big day of the week, with the release of the CPI, Philly Fed, Industrial Production, and Jobless Claims.
- Consumer sentiment closes the week out on Friday.
Obviously, the inflation numbers for producers and consumers are the key data for this week. The consensus estimate for the PPI is for a –0.1% drop in prices, and a 0.2% price increase at the consumer level.